Exhibit 4.7
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PLEDGE AND SECURITY AGREEMENT
dated as of
April 23, 1998
GLOBAL HEALTH SUB, INC.,
GLOBAL HEALTH SCIENCES, INC.,
and
the Subsidiary Grantors,
as Grantors,
and
CITICORP USA, INC.,
as Administrative Agent,
as Secured Party
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS...............................................................................2
Section 1.1. Certain Terms.....................................................................2
Section 1.2. Terms Defined in Credit Agreement.................................................4
Section 1.3. Terms Defined in the Uniform Commercial Code......................................4
Section 1.4. Terms Generally...................................................................4
ARTICLE II. THE SECURITY INTERESTS...................................................................4
Section 2.1. Grant of Security Interests.......................................................5
Section 2.2. Delivery of Instruments and Securities............................................7
Section 2.3. Investment Property...............................................................7
Section 2.4. Registration of Pledge............................................................7
Section 2.5. Financing Statements..............................................................8
Section 2.6. Secured Party Filing..............................................................8
Section 2.7. Further Assurances................................................................8
Section 2.8. Power of Attorney.................................................................8
Section 2.9. Survival of Security Interests...................................................10
Section 2.10. Reinstatement of Security Interests.............................................10
Section 2.11. Each Grantor Remains Liable.....................................................10
Section 2.12. Application of Guaranty Provisions..............................................11
Section 2.13. Liability Joint and Several.....................................................11
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................11
Section 3.1. The Collateral...................................................................11
Section 3.2. Maintenance of Perfection........................................................13
Section 3.3. Defense of Collateral............................................................14
Section 3.4. Transfer or Encumbrance..........................................................14
Section 3.5. Payments, Dividends and Distributions............................................14
Section 3.6. Voting Rights....................................................................14
Section 3.7. Maintenance of Collateral........................................................15
Section 3.8. Concerning Equipment and Inventory...............................................15
Section 3.9. Concerning Accounts, Instruments and other Claims................................16
Section 3.10. Substituted Performance.........................................................17
ARTICLE IV. DEFAULT; REMEDIES.......................................................................17
Section 4.1. Default..........................................................................17
Section 4.2. Remedies upon Default............................................................17
Section 4.3. Waivers by Grantors..............................................................19
Section 4.4. Standard of Care.................................................................19
Section 4.5. Application of Proceeds..........................................................19
Section 4.6. Indemnity and Expenses...........................................................20
Section 4.7. Surplus, Deficiency..............................................................20
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Section 4.8. Information Related to the Collateral............................................21
Section 4.9. Sale Exempt from Registration....................................................21
Section 4.10. Rights and Remedies Cumulative..................................................21
Section 4.11. No Direct Enforcement by Beneficiaries..........................................21
ARTICLE V. CONCERNING THE SECURED PARTY.............................................................22
Section 5.1. Agent for Holders................................................................22
Section 5.2. Administrative Agent shall be the Secured Party..................................22
Section 5.3. No Assurances or Liability.......................................................22
Section 5.4. Holders Bound....................................................................23
ARTICLE VI. MISCELLANEOUS PROVISIONS................................................................23
Section 6.1. Continuing Security Interests; Release...........................................23
Section 6.2. Senior Indebtedness..............................................................23
Section 6.3. Amendments; Etc..................................................................23
Section 6.4. Failure or Indulgence Not Waiver; Remedies Cumulative............................24
Section 6.5. Notices..........................................................................24
Section 6.6. Severability.....................................................................24
Section 6.7. Headings.........................................................................24
Section 6.8. Governing Law; Terms.............................................................24
Section 6.9. Consent to Jurisdiction and Service of Process...................................24
Section 6.10. Waiver of Jury Trial............................................................25
Section 6.11. Additional Grantors.............................................................25
Section 6.12. Counterparts....................................................................26
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PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
April 23, 1998, and entered into by and among GLOBAL HEALTH SUB, INC., a
California corporation (the "Borrower"), GLOBAL HEALTH SCIENCES, INC., a
California corporation ("Holdings"), each of the Persons identified as
Initial Subsidiary Grantors on the signature pages hereof (each, an "Initial
Subsidiary Grantor") and each other Person that at any time agrees in writing
to be bound as a Subsidiary Grantor hereunder (the Initial Subsidiary
Grantors and each such other Person, the "Subsidiary Grantors" and, together
with the Borrower and Holdings, the "Grantors"), and CITICORP USA, INC., a
Delaware corporation, in its capacity as Administrative Agent under the
Credit Agreement referred to below ("Secured Party"), for the benefit of the
Persons that now are or at any time hereafter become party as a Lender to the
Credit Agreement described herein (the "Lenders"), CITICORP USA, INC., in its
individual capacity and as Administrative Agent, CITIBANK, N.A., as Issuing
Bank, BANK OF AMERICA NT&SA, as Documentation Agent, and all other present
and future Holders of any of the Secured Obligations described herein (all,
collectively, including the Lenders, the Administrative Agent, the Issuing
Bank and the Documentation Agent, the "Beneficiaries").
Recitals
The Borrower is a Subsidiary of Holdings. Each Initial Subsidiary
Grantor is a Subsidiary of the Borrower, and each Person that hereafter
agrees to become bound hereby as a Subsidiary Grantor is, on the date it
becomes bound hereby, a Subsidiary of the Borrower.
The Borrower has requested that credit be extended to the Borrower
on terms and conditions set forth in the Credit Agreement.
To induce the Lenders, the Administrative Agent, the Issuing Bank
and the Documentation Agent to enter into the Credit Agreement, and in
consideration thereof and of any and all credit at any time extended
thereunder, (a) Holdings and the Initial Subsidiary Grantors have offered to
issue the guaranties and indemnities and enter into the agreements set forth
in Guaranty, Indemnity and Subordination Agreement dated as of April 23, 1998
(the "Guaranty, Indemnity and Subordination Agreement"), and to grant to the
Administrative Agent, for the benefit of the Beneficiaries, the collateral
security described herein as security for the payment of the Secured
Obligations on the terms herein set forth, and (b) Holdings and the Borrower
have agreed in the Credit Agreement to cause each Person that hereafter
becomes a Subsidiary of the Borrower to become bound by the provisions of the
Guaranty, Indemnity and Subordination
Agreement as a Subsidiary Guarantor thereunder and to become bound by the
provisions hereof as a Subsidiary Grantor hereunder.
Accordingly, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party for the benefit
of the Beneficiaries as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Certain Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Bankruptcy Code" means Title 11 of the United States Code, as from
time to time amended.
"Claim" has the meaning set forth in the Bankruptcy Code.
"Collateral" has the meaning set forth in Section 2.1.
"Credit Agreement" means the Credit Agreement dated as of April 23,
1998, by and among Global Health Sub, Inc., a California corporation, Global
Health Sciences, Inc., a California corporation, the Lenders party thereto,
the Administrative Agent, the Issuing Bank and the Documentation Agent, as
such agreement from time to time may be modified, amended, restated,
extended, refinanced or replaced in any manner or in any respect (including
so as to reduce or increase the amount or cost of credit extended thereunder
or to shorten or extend the time of payment thereunder or in any other manner
change the amount or terms of credit extended to the Borrower or the
identity, rights or obligations of any party thereto).
"Discharge of the Credit Agreement" means that all obligations of
the Lenders to extend credit under the Credit Agreement and all letters of
credit at any time issued under the Credit Agreement have expired or been
terminated and have been absolutely, unconditionally and irrevocably
discharged and all Obligations at any time created, incurred or outstanding
(except Obligations for indemnification which are then contingent and in
respect of which no claim or demand has then been made) have been fully and
finally paid in cash.
"Equity Interests" means, with respect to any Person, any capital
stock of such Person or membership interests, partnership interests (whether
general or limited) or other equity interests in such Person, regardless of
type, class, preference or designation, and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls or claims of any
character with respect thereto, in each case whether outstanding on the date
of this Agreement or issued or granted at any time thereafter.
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"Holder" means, in respect of any Secured Obligation, the Person
entitled to enforce payment thereof and specifically includes each Lender,
the Administrative Agent, the Issuing Bank, the Documentation Agent and the
Arranger.
"Obligations" means all direct or indirect debts, liabilities and
obligations of the Borrower or any other Grantor of any and every type and
description at any time arising under or in connection with the Credit
Agreement or any other Loan Document, to the Administrative Agent, the
Arranger, the Documentation Agent, the Issuing Bank, Citibank, any Lender,
any Person entitled to indemnification pursuant to the Credit Agreement or
any other Loan Document or to any other Person, in each case whether now
outstanding or hereafter created or incurred, whether or not the right of
such Person to payment in respect of any such debts, liabilities or
obligations is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and whether or not such claim is discharged, stayed or
otherwise affected by any bankruptcy case or insolvency, reorganization,
receivership, dissolution or liquidation proceeding, and shall include (a)
all liabilities of the Borrower for principal of and interest on any and all
Loans at any time outstanding under the Credit Agreement, (b) all liabilities
of the Borrower in respect of letters of credit at any time issued pursuant
to the Credit Agreement, (c) all liabilities of the Borrower under the Loan
Documents for any fees, costs, taxes, expenses, indemnification and other
amounts payable thereunder, (d) all liabilities of any Grantor under any
Intercompany Note, (e) all liabilities of any Guarantor under the Guaranty,
Indemnity and Subordination Agreement, and (f) all other liabilities of the
Borrower or any other Grantor under or in respect of any of the Loan
Documents or any of the transactions contemplated thereby and specifically
includes (i) any and all present and future "Obligations" as such term is
defined in the Credit Agreement and (ii) any and all Post-Petition Interest
and Expense Claims.
"Perfected" means, as to the security interests granted to Secured
Party in Section 2.1, that (a) a creditor on a simple contract cannot acquire
a judicial lien that is superior to such security interests and (b) if a case
were pending under the Bankruptcy Code in which any Grantor is the debtor,
such security interests would be a Lien that is perfected in such bankruptcy
case.
"Post-Petition Interest and Expense Claims" means any and all claims
of any Holder of Secured Obligations (a) for interest on any Obligations
determined for any period of time occurring after the commencement of any
case under the Bankruptcy Code or any other insolvency, reorganization,
receivership, dissolution or liquidation proceeding at the contract rate
(including any applicable post-default increase therein) set forth in the
Credit Agreement or any other Loan Document or (b) for cost and expense
reimbursements or indemnification on the terms set forth in the Credit
Agreement or any other Loan Document relating to costs and expenses incurred
and indemnification rights accrued at any time after the commencement of any
such case or proceeding, in each case to the extent such claim accrues or
becomes payable in accordance with the provisions of the Credit Agreement or
other Loan Documents (or would
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have accrued or become payable if enforceable or allowable in such case or
proceeding), whether or not such claim is enforceable, allowable or allowed
in such case or proceeding and even if such claim is disallowed therein.
"Secured Obligations" is defined in Section 2.1.
Section 1.2. Terms Defined in Credit Agreement. Unless the context
otherwise requires, capitalized terms used and not otherwise defined herein
shall have the meanings given in the Credit Agreement.
Section 1.3. Terms Defined in the Uniform Commercial Code. When
capitalized, the following terms used in this Agreement or the Security
Documents have the meanings given to them in the Uniform Commercial Code, as
in effect in the State of New York on the date of this Agreement: Accounts;
Certificated Security; Chattel Paper; Commodity Account; Commodity Contract;
Commodity Intermediary; Control; Documents; Equipment; Financial Asset;
Fixtures; General Intangibles; Goods; Instruments; Inventory; Investment
Property; Securities Account; Securities Intermediary; Security; Security
Certificate; Security Entitlement; and Uncertificated Security.
Section 1.4. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation." The word "will" shall be construed to have the same meaning and
effect as the word "shall." Unless the context requires otherwise, (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed
to include such Person's successors, transferees and assigns, (c) the words
"herein," "hereof" and "hereunder," and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections
of, and Exhibits and Schedules to, this Agreement, and (e) the words "asset"
and "property" shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, whether
real, personal or mixed and of every type and description.
ARTICLE II.
THE SECURITY INTERESTS
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Section 2.1. Grant of Security Interests. As security for the
payment of the Obligations and all Post-Petition Interest and Expense Claims
(collectively, the "Secured Obligations"), each Grantor hereby assigns to
Secured Party for the benefit of the Beneficiaries, and grants Secured Party
for the benefit of the Beneficiaries security interests in, all of such
Grantor's right, title and interest in and to the following types or items of
property, in each case whether now or hereafter existing or owned by such
Grantor or in which such Grantor now owns or hereafter acquires an interest
and wherever the same may be located (collectively, the "Collateral"):
(i) all Inventory, including specifically all raw
materials, work-in-process, finished goods, supplies, materials, spare parts,
Goods held for sale or on lease or for lease or furnished or to be furnished
under contracts of service, merchandise inventory, rental inventory, and
returned or repossessed Goods and all rights to enforce return or
repossession by reclamation, stoppage in transit or otherwise,
(ii) all Equipment, including specifically all
manufacturing, printing, distribution, delivery, retailing, vending, data
processing, communications, office and other equipment in all of its forms,
all vehicles, all tools, dies, and molds, all Fixtures, all other Goods used
or bought for use primarily in a business and all other Goods except
Inventory,
(iii) all Accounts,
(iv) all Chattel Paper,
(v) all Documents,
(vi) all Instruments and all other Claims that are in any
respect evidenced or represented by any writing, including specifically the
Intercompany Notes described in Schedule 3.1(b), all other Intercompany Notes
and all other writings evidencing or representing a Claim against the
Borrower, Holdings or any Borrower Subsidiary or any other Person,
(vii) all Securities, whether constituting Certificated
Securities or Uncertificated Securities, all Financial Assets, all Security
Entitlements, all Securities Accounts, all Commodity Contracts, all Commodity
Accounts, and all other Investment Property, including specifically the
Security Certificates described in Schedule 3.1(b) and all other Equity
Interests and all Permitted Investments,
(viii) all money, cash and cash equivalents, including
specifically all deposit accounts and all certificates of deposit,
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(ix) all General Intangibles, including specifically (a) the
property described on Schedule 3.1(c), (b) all registered and unregistered
trademarks and servicemarks and all trademark and service ▇▇▇▇ license
agreements to which any Grantor is a party (whether as licensor or licensee)
and all Claims (including infringement claims) relating thereto, (c) all
patents and patent applications and all patent license agreements to which
any Grantor is a party (whether as licensor or licensee) and all Claims
(including infringement claims) relating thereto, (d) all registered and
unregistered copyrights and all copyright license agreements to which any
Grantor is a party (whether as licensor or licensee) and Claims (including
infringement claims) relating thereto, (e) all other intellectual property in
which any Grantor has an interest, including proprietary research and
development, know-how, trade secrets, trade names, trade styles, license
agreements and user rights and Claims (including infringement claims)
relating thereto, (f) all customer lists and agreements, (g) all supplier
lists and agreements, (h) all employee and consultant lists, rights, and
agreements, (i) all computing, data and information processing and
communications programs, discs, designs, and information and the data and
other entries thereon, (j) all books, records, catalogs, back issues, library
rights and all manifestations and embodyments thereof, (k) all rights and
Claims arising under or in respect of the Reorganization Agreement or the
other Transaction Agreements, including all indemnification rights and
indemnification payments thereunder, (l) all rights and Claims arising under
or in respect of the Credit Agreement or any Loan Document, including rights
and Claims against Secured Party or any other Beneficiary, (m) all rights and
Claims arising in respect of the Transactions, (n) all Net Cash Proceeds, (o)
all tax refunds, (p) all policies of insurance and condemnation awards of
every type and description and the proceeds thereof, (q) all loans
receivable, letters of credit, bonds and undertakings (including without
limitation the Herbalife Bond), deferred purchase price or deferred purchase
consideration, consulting or non-competition payments and other Indebtedness,
liabilities and obligations receivable not constituting an Account and not
evidenced or represented by any Instrument, Chattel Paper or Security, (r)
all rights of recoupment, recourse, reimbursement, subrogation, indemnity or
contribution (including those arising under the Guaranty, Indemnity and
Subordination Agreement, those arising in respect of any Guarantee of the
Senior Notes or any other Guarantee or any payment thereon, and those arising
on account of any other agreement, transaction or event), (s) all other
causes of action and Claims of every type and description, whether fixed or
contingent, liquidated or not liquidated, accrued or not accrued, and all
judgments, orders and recoveries thereon, (t) all other agreements and
contract rights of every type and description and Claims thereon or relating
in any manner thereto, (u) all other rights, privileges, benefits,
entitlements, franchises, licenses and expectancies of every type and
description, (v) all other intangible property of every type and description,
and (w) all goodwill associated with any of the foregoing,
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(x) all property that is at any time delivered to, or that
is is at any time in the Control of, Secured Party,
together, in each case, with (a) all accessions thereto and
products and replacements thereof, (b) all guaranties, Liens and other forms
of collateral security therefor, (c) all dividends, distributions, and
payments received thereon or in exchange or substitution therefor or upon
Transfer thereof, and (d) all other proceeds thereof.
Section 2.2. Delivery of Instruments and Securities. On the date
hereof or, if hereafter acquired, immediately upon acquisition thereof,
without any notice from or demand by Secured Party, (a) each Grantor shall
deliver to Secured Party the Intercompany Notes and the Security Certificates
described in Schedule 3.1(b) as owned by it and all other Instruments (except
checks received and collected in the ordinary course of business) and
Security Certificates at any time owned by it and constituting Collateral, in
each case in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer, assignments in blank or with appropriate
endorsements, in form and substance satisfactory to Secured Party, and (b)
each Grantor shall cause the issuer of each Uncertificated Security owned by
it and constituting Collateral to register Secured Party as the registered
owner thereof, either upon original issuance or by registration of transfer
and shall execute and deliver all writings necessary to cause such issuer to
do so.
Section 2.3. Investment Property. Each Grantor will cause Secured
Party's security interests in Investment Property owned by such Grantor to be
and remain continuously Perfected by Control and, in addition, will cause
such security interests to be Perfected by filing. No Grantor will grant or
permit any other security interest or Lien upon any Investment Property
constituting Collateral. If so requested at any time by Secured Party or the
Required Lenders as to any Security Entitlement or Securities Account or any
Commodity Contract or Commodity Account that is owned by any Grantor, such
Grantor will promptly cause each Person who is a Securities Intermediary as
to any such Security Entitlement or Securities Account and each Person who is
a Commodity Intermediary as to any such Commodity Contract or Commodity
Account to deliver a written agreement enforceable by Secured Party for the
benefit of the Beneficiaries waiving and releasing, and agreeing not to
create, grant, accept or hold, any priority, pari passu or junior security
interest or Lien therein. No Grantor will cause or permit any Equity Interest
in any Subsidiary to be outstanding as an Uncertificated Security or to
constitute a Security Entitlement or be held in a Securities Account.
Section 2.4. Registration of Pledge. Secured Party may at any time
when any Event of Default is continuing and without any notice to any Grantor
or any other Person, transfer to and register in Secured Party's name, as
pledgee, any and all Instruments and Investment Property constituting
Collateral. Such transfer and registration shall not foreclose or otherwise
affect any rights or interests of any Grantor and shall not increase,
restrict or reduce any of Secured Party's rights and remedies. If after any
such transfer and registration
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any Grantor remains entitled under Section 3.6 to exercise voting rights with
respect to Equity Interests included in such Investment Property, Secured
Party shall, at the written request of such Grantor, deliver to such Grantor
a revocable proxy or other instrument sufficient to permit such Grantor to
exercise such voting rights to the extent permitted under Section 3.6.
Section 2.5. Financing Statements. Each Grantor will duly execute,
deliver and (subject to execution by Secured Party, where required by law)
file duly completed financing statements naming such Grantor as debtor,
naming Secured Party as secured party, and covering the property described in
Section 2.1, in the proper filing office in each jurisdiction in which a
financing statement is required from time to time to be filed in order to
ensure that the security interests granted to Secured Party in Section 2.1
are at all times continuously Perfected, to the extent that, under applicable
law, such security interests can be Perfected by the filing of a financing
statement.
Section 2.6. Secured Party Filing. Secured Party is hereby
authorized to file one or more financing statements and continuations thereof
and amendments thereto, relative to all or any part of the Collateral,
without the signature of any Grantor where permitted by law.
Section 2.7. Further Assurances. Each Grantor will promptly (and in
any event within five Business Days after request by Secured Party or the
Required Lenders) execute and deliver, and use its reasonable and diligent
best efforts to obtain from other Persons, all instruments and documents
(including security agreements, security assignments, Lien releases, Lien
waivers, transfer documents and transfer notices, financing statements and
other lien notices), in form and substance satisfactory to Secured Party or
the Required Lenders, and take all other actions which are necessary or, in
the good faith judgment of Secured Party or the Required Lenders, desirable
or appropriate in order to create, maintain, perfect, ensure the agreed
priority of, protect or enforce Secured Party's security interests in the
Collateral, to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral, to protect the Collateral
against the rights, claims or interests of third persons, or to effect or to
assure further the purposes and provisions of this Agreement, and each
Grantor agrees to pay all costs related thereto and all reasonable expenses
incurred by Secured Party in connection therewith.
Section 2.8. Power of Attorney. Each Grantor hereby irrevocably
constitutes and appoints Secured Party and any officer, agent or nominee of
Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority, in the name of such Grantor
or in its own name, if and whenever any Grantor is in default under this
Agreement as set forth in Section 4.1 to take any and all actions and to
execute and deliver any and all agreements, documents, notices, instruments
and writings that Secured Party or the Required Lenders may determine to be
necessary or desirable to create, perfect or ensure the agreed priority of
the security interests granted in Section 2.1 or to enforce such security
interests in any lawful and commercial reasonable manner or otherwise to
protect Secured Party's interest in the
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Collateral in any lawful and commercially reasonable manner, including the
power and right on behalf of any Grantor, without notice to or assent by any
Grantor:
(i) to ask for, demand, ▇▇▇ for, collect, settle and give
acquittance for any and all moneys due or to become due with respect to any
or all of the Collateral and otherwise to demand and enforce payment and
collection of any and all Claims constituting Collateral,
(ii) to sign and file in any office in any jurisdiction
financing statements, lien notices, collateral assignments and any other
instruments or writings that may be required or, in the opinion of Secured
Party or the Required Lenders, appropriate to create or Perfect a security
interest in or Lien upon any of the Collateral as security for the Secured
Obligations,
(iii) to accept, hold, collect, endorse, transfer and deliver
any and all checks, notes, drafts, acceptances, documents and other
negotiable and nonnegotiable Instruments, Securities, Documents and Chattel
Paper constituting Collateral that may be delivered to Secured Party in
accordance with the provisions of this Agreement, whether made payable to a
Grantor or otherwise,
(iv) to commence, file, prosecute, defend, settle,
compromise or adjust any claim, suit, action or proceeding with respect to
any or all of the Collateral or otherwise to enforce the rights of Secured
Party with respect to any of the Collateral,
(v) to obtain, contest, enforce, adjust and settle Claims
for insurance proceeds or condemnation awards constituting proceeds of
Collateral or required to be paid to Secured Party pursuant to this Agreement
or the Credit Agreement,
(vi) to do, at its option and at the expense and for the
account of any Grantor, at any time and from time to time, all lawful and
commercially reasonable acts and things that Secured Party or the Required
Lenders may deem necessary or desirable to protect or preserve the Collateral
or to realize upon the Collateral,
(vii) to contest, settle, pay or discharge taxes or Liens
(other than Liens permitted under this Agreement or the Credit Agreement)
levied or placed upon or threatened against any of the Collateral, and for
such purposes (A) the legality or validity thereof and amounts necessary to
settle or discharge the same may be determined by Secured Party or the
Required Lenders in its or their commercially reasonable discretion and (B)
each Grantor agrees immediately upon demand to reimburse Secured Party for
any payments made by Secured Party on account of any such taxes or Liens, as
part of the Obligations secured hereby,
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(viii) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with the
Accounts and other documents relating to the Collateral, and
(ix) generally to sell, Transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and at Grantors' expense, at
any time or from time to time, all acts and things that Secured Party or the
Required Lenders reasonably deem necessary to protect, preserve or realize
upon the Collateral and Secured Party's security interests therein in order
to effect the intent of this Agreement, all as fully and effectively as any
Grantor might do.
The power granted in this Section 2.8 is a power coupled with an interest, is
irrevocable and shall be discharged upon Discharge of the Credit Agreement.
Section 2.9. Survival of Security Interests. The security interests
granted hereby shall, unless released in writing by Secured Party, (a) remain
enforceable as security for all Secured Obligations now outstanding or
created or incurred at any future time (whether or not created or incurred
pursuant to any agreement presently in effect or hereafter made and
notwithstanding any subsequent repayment of any of the Secured Obligations or
any other act, occurrence or event), until Discharge of the Credit Agreement,
(b) survive the Discharge of the Credit Agreement to the same extent that any
contingent Obligation survives, and (c) survive any sale or other Transfer of
any Collateral and remain enforceable against each transferee and subsequent
owner thereof, even if such sale or other Transfer is permitted at the time
under the Credit Agreement, except in the case of inventory sold in the
ordinary course of business and any other Collateral that is expressly and
specifically released from the security interests created hereby pursuant to
a written release signed by Secured Party.
Section 2.10. Reinstatement of Security Interests. If at any time
any payment on any Secured Obligation is set aside, avoided or rescinded or
must otherwise be restored or returned, this Agreement and the security
interests granted to Secured Party herein and all other obligations of each
Grantor hereunder shall remain in full force and effect and, if previously
released or terminated, shall be automatically and fully reinstated, without
any necessity for any act, consent or agreement of any Grantor, as fully as
if such payment had never been made and as fully as if any such release or
termination had never become effective.
Section 2.11. Each Grantor Remains Liable. Anything contained
herein to the contrary notwithstanding, (a) each Grantor shall remain liable
under all contracts and agreements included in the Collateral, to the extent
set forth therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the exercise
by Secured Party of any of its rights hereunder shall not release any Grantor
from any of
10
its duties or obligations under any contract or agreement included in the
Collateral, (c) Secured Party shall not have any obligation or liability
under any contract or agreement included in the Collateral by reason of this
Agreement or the grant to Secured Party of any security interest in such
contract or agreement, and (d) Secured Party shall not be obligated to
perform any of the obligations or duties of any Grantor under any contract or
agreement included in the Collateral or to take any action to collect or
enforce any claim for payment assigned hereunder.
Section 2.12. Application of Guaranty Provisions. Each and all of
the provisions set forth in the Guaranty, Indemnity and Subordination
Agreement that govern or in any respect relate to any Guarantor's guarantee
of payment of the Guaranteed Obligations (as defined therein) or the
liability of any Guarantor thereunder or any recourse, reimbursement,
contribution, indemnity or subrogation rights related thereto and the
subordination of claims arising therefrom (including specifically each and
all of the provisions in Section 2.5, Article III, Article IV and Sections
5.1, 5.2, 5.3, 5.4, 5.5, 5.6 and 5.7 thereof) shall apply with like force and
effect to the security interest granted by such Guarantor as Grantor under
this Agreement and to the liability of such Guarantor as Grantor under this
Agreement, mutatis mutandis, to the end and with the effect that (a) such
security interest and liability hereunder shall be as equally absolute,
unconditional, continuing, unlimited (except to the extent provided in
Section 2.5 of the Guaranty, Indemnity and Subordination Agreement),
enduring, assured and protected as such Guaranteed Obligations and the
liability of such Guarantor under the Guaranty, Indemnity and Subordination
Agreement are absolute, unconditional, continuing, unlimited, enduring,
assured and protected and (b) all recourse, reimbursement, contribution,
indemnity or subrogation rights are forever waived, released and discharged
with respect to such security interest or any enforcement of such security
interest or the liability of any Grantor hereunder on the same terms as those
set forth in Article IV of the Guaranty, Indemnity and Subordination
Agreement, with the exceptions therein set forth.
Section 2.13. Liability Joint and Several. The security interest
granted by each Grantor herein and all liability of each Grantor hereunder
shall be the joint and several obligation of each Grantor and may be freely
enforced against each Grantor, for the full amount of the Secured Obligations
and all other liabilities of such Grantor hereunder, without regard to
whether enforcement is sought or available against any other Grantor.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Grantor represents and warrants to Secured Party and agrees
with Secured Party that:
Section 3.1. The Collateral.
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(a) Ownership. Except as otherwise expressly permitted under the
Credit Agreement, (i) each Grantor owns its interest in the Collateral free
and clear of any and all Liens and (ii) no effective financing statement or
other instrument similar in effect covering all or any part of the Collateral
is on file in any filing or recording office, except those in favor of
Secured Party.
(b) Interests in and Claims against Subsidiaries. Schedule 3.1(b)
sets forth accurately and exhaustively all Equity Interests owned by any
Grantor in any Subsidiary of any Grantor, all other Equity Interests owned by
any Grantor and all Intercompany Notes issued to any Grantor by any other
Grantor. All such Equity Interests are represented by Security Certificates
that have been duly authorized and validly issued, are fully paid and
non-assessable and were not issued in breach or derogation of preemptive
rights of any Person.
Each Grantor is lawfully indebted as issuer under each respective
Intercompany Note described in Schedule 3.1(b) in the amount of the initial
loan set forth in such Intercompany Note. Such indebtedness (i) constitutes a
legally valid and binding obligation of each such Grantor, enforceable
against it in accordance with its terms, (ii) is evidenced by and due and
payable on the terms set forth in such Intercompany Note and (iii) is secured
by the security interests granted by such Grantor to the Administrative
Agent, for the benefit of the Beneficiaries, as set forth herein. Each
Intercompany Note and the indebtedness from time to time evidenced thereby
and any and all collateral security therefor are enforceable solely by the
Administrative Agent for the benefit of the Beneficiaries, as security for
the payment of the Secured Obligations.
(c) Intellectual Property. Schedule 3.1(c) sets forth accurately
and exhaustively (a) all registered and unregistered trademarks and
servicemarks owned by any Grantor, all trademark and service ▇▇▇▇ license
agreements to which any Grantor is a party (whether as licensor or licensee),
and all pending or overtly threatened infringement claims by or against any
Grantor and other litigation relating to any such trademarks, servicemarks or
trademark or servicemark license agreements, (b) all patents and patent
applications owned by any Grantor, all patent license agreements to which any
Grantor is a party (whether as licensor or licensee), and all pending or
overtly threatened infringement claims by or against any Grantor and other
litigation relating to any such patents, patent applications or patent
license agreements, (c) all registered and unregistered copyrights owned by
any Grantor, all copyright license agreements to which any Grantor is a party
(whether as licensor or licensee) and all pending or overtly threatened
infringement claims by or against any Grantor or other litigation relating to
any such copyrights or copyright license agreements, (d) all other General
Intangibles in which any Grantor has an interest, including proprietary
research and development, know-how, trade secrets, trade names, license
agreements and user rights and other intellectual property of every type and
description, all pending or overtly threatened infringement claims by or
against any Grantor and other litigation relating thereto, and all other
intangible property.
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(d) Other Investment Property. Schedule 3.1(d) sets forth
accurately and exhaustively all other Investment Property of any Grantor,
except Investment Property constituting Permitted Investments.
(e) Location of Equipment and Inventory. All Equipment and
Inventory are located and intended to be kept at one of the collateral
locations specified on Schedule 3.1(e).
(f) No Consumer Goods or Farm Products. No Grantor owns any assets
that are, as to it, consumer goods or farm products.
(g) Location of Grantors. Each Grantor's chief place of business,
chief executive office and office or offices where such Grantor keeps its
records regarding its Accounts and all originals of its Chattel Paper are
located, and during the preceding four months were located, at the Grantor
locations specified on Schedule 3.1(g).
(h) Names. The correct legal name of each Grantor is set forth in
the preamble to this Agreement. No Grantor conducts business or hold itself
out under, and in the past five years has not conducted business or held
itself out under, any other name (including any trade-name or fictitious
business name) except any name listed on Schedule 3.1(h).
(i) Taxpayer ID Number. The proper taxpayer identification number
for each Grantor is accurately set forth on Schedule 3.1(i).
(j) Perfection. The security interests granted to Secured Party in
Section 2.1 are lawful, valid and enforceable security interests that at all
times have been, and remain, duly and continuously Perfected.
(k) Amendment of Schedule 3.1. Any Grantor may at any time
unilaterally amend any schedule delivered under Section 3.1 in any respect
required by the occurrence of any event that does not constitute or give rise
to a Default, by giving written notice thereof to Secured Party. To be
effective, such notice must state conspicuously that it constitutes an
amendment to certain factual matters relating to the Collateral set forth in
Section 3.1 of this Agreement.
Section 3.2. Maintenance of Perfection. No Grantor will (a) cause,
permit or suffer any voluntary or involuntary change in its name, identity or
corporate structure, or in the location of its chief executive office, or (b)
keep any records relating to its Accounts or any tangible Collateral (other
than mobile goods) at any location other than a location set forth in
Schedule 3.1(g), unless (in each case) (i) Schedule 3.1(g) has first been
appropriately supplemented with respect thereto, and (ii) an appropriate
financing statement has been filed in the proper office and in the proper
form, and all other requisite actions have been taken, to Perfect and
continue the Perfection (without loss of priority) of Secured Party's
security interests in the Collateral.
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Section 3.3. Defense of Collateral. Each Grantor will defend the
Collateral against all claims and demands of all Persons at any time claiming
any interest therein.
Section 3.4. Transfer or Encumbrance. No Grantor will encumber or
Transfer any item of Collateral or any interest therein, or permit or suffer
any item of Collateral to be encumbered or Transferred, unless (a) such
action is permitted at the time under the Credit Agreement and (b) each
Grantor makes all payments on account of the Secured Obligations required to
be made therefrom and takes all other actions required to be taken in
connection therewith under the Credit Agreement or any other Loan Document.
Section 3.5. Payments, Dividends and Distributions. Each Grantor
shall be entitled to receive all payments on Accounts, Instruments and Claims
owned by it and all dividends and distributions on Equity Interests and other
Investment Property owned by it, so long as (a) no Event of Default has
occurred and is continuing or would result therefrom, (b) such Grantor
ensures that Secured Party's security interests in any and all such payments,
dividends and distributions remain continuously Perfected and (c) each
Grantor makes all payments on account of the Secured Obligations required to
be made therefrom and takes all other actions required to be taken in
connection therewith under the Credit Agreement or any other Loan Document.
Section 3.6. Voting Rights. So long as no Event of Default has
occurred or would result therefrom, each Grantor shall have and may exercise
all voting rights with respect to any and all Equity Interests constituting
Collateral, except that:
(a) No Breach. No Grantor shall act or vote in favor of any action
that would constitute or cause a breach of any obligations of any Grantor
under the Credit Agreement or under any other Loan Document;
(b) No Capital Structure Changes. No Grantor shall act or vote in
favor of (i) the authorization or issuance of any options, warrants, voting
rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation, sale
or disposition of assets, or dissolution, without giving Secured Party at
least 15 days' prior written notice thereof;
(c) Material Adverse Changes. No Grantor shall act or vote in favor
of any action that has or is reasonably likely to have a material adverse
effect on the value of any of the Collateral or that has, or would reasonably
be expected to result in, a Material Adverse Effect; and
(d) Termination of Voting Rights. At any time when any Grantor is
in default under this Agreement as set forth in Section 4.1, Secured Party
may terminate any or all of each Grantor's voting rights with respect to any
or all Equity Interests constituting Collateral, either by giving written
notice of such termination to the Borrower or by
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transferring such Equity Interests into Secured Party's name, and Secured
Party shall thereupon have the sole right and power to exercise such voting
rights.
Section 3.7. Maintenance of Collateral. Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any other Loan Document or
any applicable statute, regulation or ordinance or any policy of insurance
covering any such Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days after such change;
(c) give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office, places of
business, collateral locations or federal taxpayer ID number or the office
where such Grantor keeps its Chattel Paper and its records regarding any
Accounts;
(d) if the Lenders give value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all material property and other taxes,
assessments and governmental charges or levies imposed upon any Collateral
and all Claims that are or might become secured by any Lien upon any
Collateral, except to the extent the same is being contested as permitted
under the Credit Agreement; provided, that, notwithstanding any other
provision in the Loan Documents, each Grantor shall in any event pay such
taxes, assessments, charges, levies and Claims not later than five days prior
to the date of any proposed sale under any judgment, writ or warrant of
attachment or other legal process entered or filed against any Grantor or any
Collateral as a result of the failure to make such payment.
Section 3.8. Concerning Equipment and Inventory. Each Grantor will:
(a) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new (ordinary wear and tear and
worn-out and surplus equipment excepted) and in accordance with such
Grantor's past practices and make or cause to be made all repairs,
replacements and other improvements in connection therewith that are
necessary or desirable to such end;
(b) notify Secured Party of any loss or damage to any Equipment in
an amount exceeding $500,000;
(c) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, such Grantor's cost
therefor and (where applicable) the current list prices for the Inventory, in
the ordinary course of such Grantor's business;
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(d) if any Inventory is in possession or control of any agent,
carrier, warehouseman, bailee, consignee or processor, upon the occurrence of
an Event of Default instruct such Person to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party; and
(e) if so requested at any time by Secured Party or the Required
Lenders, promptly endorse and deliver to Secured Party each and all
negotiable Documents constituting Collateral.
Section 3.9. Concerning Accounts, Instruments and other Claims.
Each Grantor will:
(a) maintain accurate and complete records concerning the Accounts,
Instruments and all other Claims and the identity, name and address of each
account debtor or obligor thereon, hold and preserve such records in
safekeeping, permit representatives of Secured Party at any time during
normal business hours to inspect, copy and make abstracts from such records,
and render to Secured Party, at such Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto,
(b) if so requested at any time by Secured Party or the Required
Lenders, such Grantor will certify and deliver to Secured Party complete and
correct copies of each contract or agreement constituting Collateral,
(c) continue to collect, at such Grantor's expense, all amounts due
or to become due to such Grantor under Accounts, Instruments and other Claims
and, in connection therewith take such action as such Grantor (or, whenever
any Grantor is in default under this Agreement as set forth in Section 4.1,
as Secured Party or the Required Lenders) may reasonably deem necessary or
advisable to enforce collection of amounts due or to become due to
thereunder; provided, that Secured Party shall have the right at any time
when any Grantor is in default under this Agreement as set forth in Section
4.1 (A) to notify the account debtors or obligors under any or all Accounts,
Instruments or other Claims of the assignment of such Accounts, Instruments
or Claims to Secured Party and to direct such account debtors or obligors to
make payment of all amounts due or to become due to any Grantor thereunder
directly to Secured Party, (B) to notify each Person maintaining a lockbox or
similar arrangement to which account debtors or obligors under any Accounts,
Instruments or other Claims have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time
to time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and (C) at the expense of Grantors, to demand payment of any
Accounts, Instruments and Claims and enforce collection thereof by legal
proceedings in any lawful manner and to extend, renew adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as any Grantor might have done, and
15
(d) if Secured Party at any time exercises any of the rights
described in the proviso in Section 3.9(iii), (A) segregate from all other
funds and hold in trust for Secured Party and immediately deliver to Secured
Party (in the identical form received) all amounts and proceeds (including
checks and other instruments) received by any Grantor in respect of any and
all Accounts, Instruments and other Claims, and (B) not adjust, settle or
compromise the amount or payment of any Account or Claim, or release wholly
or partly any account debtor or obligor thereon, or allow any credit or
discount thereon.
Section 3.10. Substituted Performance. Secured Party may at any
time (but shall not be obligated to) (a) perform any of the obligations of
any Grantor under this Agreement if such Grantor fails to perform such
obligation within three Business Days (or, in the case of insurance, within
one Business Day) after written demand by Secured Party and (b) make any
payments and do any other acts which Secured Party or the Required Lenders
may deem necessary or desirable to protect Secured Party's security interests
in the Collateral, including the right to pay, purchase, contest or
compromise any Lien that attaches or is asserted against any Collateral, to
procure insurance, and to appear in and defend any action or proceeding
relating to any Collateral, and each Grantor agrees promptly to reimburse
Secured Party for all payments made by Secured Party in doing so, together
with interest thereon at the rate then applicable to ABR Loans, all
reasonable attorneys' fees and disbursements incurred by Secured Party in
connection therewith, whether or not suit is brought, and all other costs and
expenses related thereto.
ARTICLE IV.
DEFAULT; REMEDIES
Section 4.1. Default. Grantors shall be in default under this
Agreement (a) whenever any Event of Default has occurred and is continuing
(and each of the Grantors shall thereupon be in default hereunder without
regard to whether or to what degree any Grantor individually may have caused,
participated in, or had any knowledge of the occurrence of such Event of
Default) and (b) at all times after the Loans have become due and payable,
whether at maturity, upon acceleration pursuant to Section 7.1 of the Credit
Agreement or otherwise.
Section 4.2. Remedies upon Default. At any time when any Grantor is
in default under this Agreement as set forth in Section 4.1, Secured Party
may exercise and enforce, in any order, (a) each and all of the rights and
remedies available to a secured party upon default under the Uniform
Commercial Code or other applicable law, (b) each and all of the rights and
remedies available to it under the Credit Agreement or any other Loan
Document and (c) each and all of the following rights and remedies:
(a) Collection Rights. Without notice to any Grantor, Secured Party
may notify any or all account debtors and obligors on any Accounts,
Instruments or other Claims
17
constituting Collateral of Secured Party's security interests therein and may
direct, demand and enforce payment thereof directly to Secured Party.
(b) Taking Possession. Secured Party may (i) enter upon any and all
premises owned or leased by any Grantor where Collateral is located (or
believed by Secured Party to be located), with or without judicial process
and without any obligation to pay rent, (ii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Secured
Party deems appropriate, (iii) take possession of any Grantor's premises or
place custodians in exclusive control thereof, remain on such premises and
use the same and any Grantor's equipment for the purpose of completing any
work in process or otherwise preparing the Collateral for sale or selling or
otherwise Transferring the Collateral, (iv) take possession of all items of
Collateral that are not then in its possession, either upon such premises or
by removal from such premises, and (v) require any Grantor or the Person in
possession thereof to deliver such Collateral to Secured Party at one or more
locations designated by Secured Party and reasonably convenient to it and
each Grantor owning an interest therein.
(c) Foreclosure. Secured Party may sell, lease, license or
otherwise dispose of or Transfer any or all of the Collateral or any part
thereof in one or more parcels at public sale or in private sale or
transaction, on any exchange or market or at Secured Party's offices or on
any Grantor's premises or at any other location, for cash, on credit or for
future delivery, and may enter into all contracts necessary or appropriate in
connection therewith, without any notice whatsoever unless required by law.
Where permitted by law, one or more of the Beneficiaries may be the
purchasers at any such sale and in such event, if such bid is made by all of
the Lenders or by all of the Holders of Secured Obligations or otherwise
whenever a credit bid is expressly permitted under the Credit Agreement or
approved in writing by the Administrative Agent and the Required Lenders, the
Beneficiaries bidding at such sale may bid part or all of the Obligations
owing to them without necessity of any cash payment on account of the
purchase price, even though any other purchaser at such sale is required to
bid a purchase price payable in cash. Each Grantor agrees that at least 10
calendar days' written notice to such Grantor of the time and place of any
public sale of Collateral owned by it (or, to the extent such Grantor is
entitled by law to notice thereof, the public sale of any other Collateral),
or the time after which any private sale of Collateral owned by it (or, to
the extent such Grantor is entitled by law to notice thereof, the private
sale of any other Collateral) is to be made, shall be commercially
reasonable. For purposes of such notice, to the fullest extent permitted by
law (i) each Grantor waives notice of any sale of Collateral owned by any
other Grantor and (ii) each Grantor agrees that notice given to the Borrower
shall constitute notice given to such Grantor. The giving of notice of any
such sale or other disposition shall not obligate Secured Party to proceed
with the sale or disposition, and any such sale or disposition may be
postponed or adjourned from time to time, without further notice.
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(d) Use of Intellectual Property. Secured Party may, on a
royalty-free basis, use and license use of any trademark, trade name, trade
style, copyright, patent or technical knowledge or process owned, held or
used by any Grantor in respect of any Collateral as to which any right or
remedy of Secured Party is exercised or enforced.
In addition, each Holder of any Secured Obligation may exercise and enforce
such rights and remedies for the collection of such Secured Obligation as may
be available to it by law or agreement.
Section 4.3. Waivers by Grantors. Each Grantor hereby irrevocably
waives (a) all rights of redemption from any foreclosure sale, (b) the
benefit of all valuation, appraisal, exemption and moratorium laws, (c) to
the fullest extent permitted by law, all rights to notice or a hearing prior
to the exercise by Secured Party of its right to take possession of any
Collateral, whether by self-help or by legal process and any right to object
to the Secured Party taking possession of any Collateral by self-help, (d) if
Secured Party seeks to obtain possession of any Collateral by replevin, claim
and delivery, attachment, levy or other legal process, (i) any notice or
demand for possession prior to the commencement of legal proceedings, (ii)
the posting of any bond or security in any such proceedings and (iii) any
requirement that Secured Party retain possession and not dispose of any
Collateral until after a trial or final judgment in such proceedings.
Section 4.4. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or to protect,
preserve, vote or exercise any rights pertaining to any Collateral. Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property or if it selects, with reasonable care, a custodian to hold such
Collateral on its behalf.
Section 4.5. Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, or then, or at any other time thereafter,
applied in full or in part by Secured Party against, the Secured Obligations
in the following order of priority:
FIRST: To the payment of all reasonable costs and expenses of such
sale, collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other reasonable expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all reasonable advances made by
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Secured Party hereunder for the account of any Grantor, and to the payment
of all reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder, all in
accordance with Section 4.6;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) then due and payable; and
THIRD: To the payment to or upon the order of the Grantor entitled
thereto, or to whomsoever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
Section 4.6. Indemnity and Expenses.
(a) Indemnity. Each Grantor will defend, indemnify and hold
harmless Secured Party and each Beneficiary from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including enforcement of any interest, right or remedy created hereby),
except to the extent such claims, losses or liabilities are directly
attributable to Secured Party's or such Beneficiary's gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction.
(b) Expenses. Each Grantor will pay to Secured Party upon demand
the amount of any and all reasonable costs and expenses, including the
reasonable fees and expenses of its counsel and of any advisors, consultants,
experts and agents, that Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the interests,
rights or remedies of Secured Party hereunder, (iv) the failure by any
Grantor to perform or observe any of the provisions hereof, or (v) the proof,
allowance, protection, administration, treatment, discharge, collection or
enforcement of any of the Secured Obligations or any of the Collateral in any
bankruptcy case or insolvency, reorganization, receivership, dissolution or
liquidation proceeding of or affecting any Grantor.
Section 4.7. Surplus, Deficiency. Any surplus proceeds of any sale
or other disposition by Secured Party of any Collateral remaining after
Discharge of the Credit Agreement and after all Secured Obligations are paid
in full and in cash shall be paid over to the Grantor entitled thereto, or to
whomever may be lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct, but prior to Discharge of the Credit
Agreement, such surplus proceeds may be retained by Secured Party and held as
Collateral until Discharge of the Credit Agreement. The Borrower and each
Guarantor shall be and remain liable for any deficiency.
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Section 4.8. Information Related to the Collateral. If Secured
Party determines to sell or otherwise Transfer any Collateral, each Grantor
shall, and shall cause any Person controlled by it to, furnish to Secured
Party all information Secured Party may request that pertains or could
pertain to the value or condition of the Collateral or that would or might
facilitate such sale or Transfer. Secured Party shall have the right,
notwithstanding any confidentiality obligation or agreement otherwise binding
upon it, freely to disclose such information, and any and all other
information (including confidential information) pertaining in any manner to
the Collateral or the assets, liabilities, results of operations, business or
prospects of any Grantor, freely to any Person that Secured Party in good
faith believes to be a potential or prospective purchaser in such sale or
Transfer, without liability for any disclosure, dissemination or use that may
be made as to such information by any such Person.
Section 4.9. Sale Exempt from Registration. Secured Party shall be
entitled at any such sale or other Transfer, if it deems it advisable to do
so, to restrict the prospective bidders or purchasers to Persons who will
provide assurances satisfactory to Secured Party that the Collateral may be
offered and sold to them without registration under the Securities Act of
1933, as amended, and without registration or qualification under any other
applicable state or federal law. Upon the consummation of any such sale,
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Secured Party may
solicit offers to buy the Collateral, or any part of it, from a limited
number of investors deemed by Secured Party, in its good faith judgment or in
good faith reliance upon advice of its counsel, to meet the requirements to
purchase securities under Regulation D promulgated under the Securities Act
of 1933 as then in effect (or any other regulation of similar import). If
Secured Party solicits such offers from such investors, then the acceptance
by Secured Party of the highest offer obtained from any of them shall be
deemed to be a commercially reasonable method of disposition of the
Collateral.
Section 4.10. Rights and Remedies Cumulative. The rights provided
for in this Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers or privileges or remedies provided by
law or in equity, or under any other instrument, document or agreement.
Secured Party may exercise and enforce each right and remedy available to it
either before or concurrently with or after, and independently of, any
exercise or enforcement of any other right or remedy of Secured Party or any
Holder of any Secured Obligation against any Person or property. All such
rights and remedies shall be cumulative, and no one of them shall exclude or
preclude any other.
Section 4.11. No Direct Enforcement by Beneficiaries. Secured Party
may freely exercise and enforce any and all of its rights and remedies
hereunder, for the benefit of the Beneficiaries. No Beneficiary, other than
Secured Party, shall have any independent right to collect, take possession
of, foreclose against or otherwise enforce the security interests granted
hereby.
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ARTICLE V.
CONCERNING THE SECURED PARTY
Section 5.1. Agent for Holders. Secured Party is executing and
delivering this Agreement, and accepting the security interests, rights,
remedies, powers and benefits conferred upon Secured Party hereby, both for
its own benefit and as agent for all present and future Holders of Secured
Obligations. The provisions of the Credit Agreement and all rights, powers,
immunities and indemnities granted to Secured Party under the Credit
Agreement or any other Loan Document, or under any separate agreement made by
or otherwise binding upon any Holder of Secured Obligations, shall apply in
respect of such execution, delivery and acceptance and in respect of any and
all actions taken or omitted by Secured Party under, in connection with or in
respect of this Agreement.
Section 5.2. Administrative Agent shall be the Secured Party .
Secured Party shall at all times be the same Person that is the
Administrative Agent under the Credit Agreement. Written notice of
resignation by the Administrative Agent pursuant to Section 8.6 of the Credit
Agreement shall also constitute notice of resignation as Secured Party under
this Agreement; and appointment of a successor Administrative Agent pursuant
to Section 8.6 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under Section 8.6 of the Credit Agreement
by a successor Administrative Agent, the successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Secured Party under this Agreement, and
the retiring Secured Party under this Agreement shall promptly (a) transfer
to such successor Secured Party all sums, securities and other items of
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor Secured Party under this Agreement, and (b) execute and deliver
to such successor Secured Party such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation hereunder as Secured Party, the provisions
of this Agreement shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
Section 5.3. No Assurances or Liability. Secured Party makes no
statement, promise, representation or warranty whatsoever, and shall have no
liability whatsoever, to any Holder of any Secured Obligations as to the
authorization, execution, delivery, legality, enforceability or sufficiency
of this Agreement or as to the creation, perfection, priority, or
enforceability of any security interests granted hereunder or as to
existence, ownership, quality, condition, value or sufficiency of any
Collateral or as to any other matter whatsoever.
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Section 5.4. Holders Bound. Except where the consent of others may
be required pursuant to the express provisions of Section 9.2 of the Credit
Agreement, any modification, amendment, waiver, release, termination or
discharge of any security interest, right, remedy, power or benefit conferred
upon Secured Party that is effectuated in a writing signed by Secured Party
shall be binding upon all Holders of Secured Obligations if it is (a)
authorized pursuant to any provision of the Credit Agreement or any other
Loan Document, (b) required by law or (c) authorized or ratified either (i)
by the Required Holders or (ii) by the Holders of at least a majority in
outstanding principal amount of the Secured Obligations (other than
contingent or unliquidated Secured Obligations).
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Section 6.1. Continuing Security Interests; Release. This Agreement
creates continuing security interests in the Collateral and shall (a) remain
in full force and effect until the Discharge of the Credit Agreement, (b) be
binding upon each Grantor and its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of and be enforceable by Secured Party and its successors,
transferees and assigns acting in the capacity of Administrative Agent under
the Credit Agreement. Subject to and upon Discharge of the Credit Agreement,
Secured Party shall (within a reasonable time after it receives from Grantors
a written request for release of the Collateral) execute and deliver to
Grantors an instrument in form and substance satisfactory to Secured Party
releasing (on a quitclaim basis, without recourse, without warranty, and
without any liability whatsoever) any security interest Secured Party may
then hold in the Collateral and thereupon Secured Party shall, at Grantors'
expense, execute and deliver to Grantors such UCC termination statements and
other like documents as Grantors may reasonably request to evidence such
release.
Section 6.2. Senior Indebtedness. All liability of each Grantor
hereunder (other than Holdings) (a) is and shall be (and is hereby designated
as) Guarantor Senior Debt within the meaning of and for the purposes of the
Indenture dated as of April 23, 1998, by and among Holdings and Chase
Manhattan Bank & Trust Company, National Association, as trustee, and (b) is
and shall be (and is hereby made) senior in right of payment, on the terms
set forth in said Indenture, to the Senior Note Guarantees.
Section 6.3. Amendments; Etc. No amendment or waiver of any
provision of this Agreement, or consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which it was given.
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Section 6.4. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other
power, right or privilege. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
Section 6.5. Notices. Any and all notices and communications to be
given to any Grantor or Secured Party may be given by courier service,
personal service, mailing the same, postage prepaid, or by telex, facsimile
transmission or cable to each such party at the address of the Borrower set
forth in the Credit Agreement, on the signature pages hereof or to any other
address as any party hereto may specify by written notice to the other
parties, and such communication shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed.
Section 6.6. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 6.7. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
Section 6.8. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE NEW YORK UNIFORM
COMMERCIAL CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTERESTS
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Notwithstanding the foregoing, the creation, perfection, priority
and enforcement of a security interest in any deposit account shall be
governed by the laws of the state in which the depository bank, or branch
bank, maintaining such deposit account is located.
Section 6.9. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW
24
YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH GRANTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Each Grantor hereby
agrees that service of all process in any such proceeding in any such court
may be made by registered or certified mail, return receipt requested, to
such Grantor at its address provided in Section 6.5, such service being
hereby acknowledged by such Grantor to be sufficient for personal
jurisdiction in any action against such Grantor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law
or shall limit the right of Secured Party to bring proceedings against such
Grantor in the courts of any other jurisdiction.
Section 6.10. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of
this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims.
Grantors and Secured Party each acknowledge that this waiver is a material
inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this
waiver in entering into this Agreement and that each will continue to rely on
this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
Section 6.11. Additional Grantors. The initial Grantors hereunder
shall be the Borrower, Holdings and such of the Subsidiaries of the Borrower
as are signatories hereto on the date hereof. From time to time subsequent to
the date hereof, additional Subsidiaries of the Borrower may become party
hereto, as additional Grantors (each an "Additional Grantor"), by executing a
counterpart of this Agreement. Upon delivery of any such counterpart to the
Administrative Agent, notice of which is hereby waived by each Grantor, each
such Additional Grantor shall be a Grantor and shall be as fully a party
hereto as if such Additional Grantor were an original signatory hereof. Each
Grantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of any Beneficiary not to cause any Subsidiary
of Borrower to become an
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Additional Grantor hereunder. This Agreement shall be fully effective as to
any Grantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Grantor hereunder.
Section 6.12. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
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IN WITNESS WHEREOF, Grantors and Secured Party have executed this
Pledge and Security Agreement as of the date first written above.
GLOBAL HEALTH SUB, INC.,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
GLOBAL HEALTH SCIENCES, INC.,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
D&F INDUSTRIES, INC.,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
RAVEN INDUSTRIES, INC.,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-1
DYNAMIC PRODUCTS, INC.,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
WEST COAST SALES,
as Grantor
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-2
Accepted as of the 23rd day
of April, 1998
CITICORP USA, INC.,
as Administrative Agent
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-3